November 2014

Viewing posts from November , 2014

Salespeople are expected to be product experts. Having started my career with IBM I can tell you firsthand they believed this to be true. It was unsettling to see the trouble IBM experienced in the early 90’s as clients changed their view of IT spending. These events led to Lou Gerstner becoming CEO in April of 1993. Skeptics were concerned about his limited knowledge of technology and that he was the first CEO hired from the outside. Both proved to be advantages as he changed the culture and the focus from technology to business results that could be achieved through the application of technology.

A large factor in IBM’s troubles was a reliance on selling to CIO’s. For decades IT executives bought technology with little regard for cost vs. benefit. New announcements created knee-jerk first day orders. In the 5 years before Gerstner joined, clients more closely scrutinized IT expenditures and decisions migrated to business executives. The consensus was that IBM salespeople lost the ability to have conversations about business issues with non-IT executives.

Old selling habits linger. Companies continue to provide extensive product training to sellers. In today’s environment, whom are sellers “educating?” Mid to lower levels self-educate via the Internet. They don’t want to be influenced or manipulated when determining their requirements. I hope you’d agree few senior executives would tolerate product presentations. They’re busy and just want to understand the potential value that can be realized through the usage of an offering.

The Role ShiftThe role of a seller needs to align with changes in buying behavior. I found the results of a recent Software Advice™ study encouraging (Software Advice™ is a sales software reviews firm). They analyzed job qualifications for Sales Directors. They found that the top 3 undergraduate degrees required for job applicants were:

Business (42%)

Marketing (23%)

Engineering (12%)

Sales executives with business degrees may start to steer organizations toward making sellers more comfortable discussing business issues with executives. In my mind this is a requirement. It wasn’t always that way. The 90’s provided an incredible business climate. Money flowed freely. There was a fair amount of “order taking” going on for vendors with “hot” offerings.

For the last 15 years companies have pulled the reins in on making expenditures. Whether opportunities begin reactively with inbound inquiries from mid level staff or proactively by targeting prospects, I believe competent sales professionals must have the ability to:

Discuss desired business outcomes with Key Player levels.

Work with buying committees to assess early in buying cycles if there will be enough potential value to offset the cost of offerings.

Reducing the emphasis on product training would allow more time to arm sellers with a better understanding of business issues for verticals they call on. Strong business cases built with the participation of committee members should increase the chances of getting buying decisions made. Failure to do so will often result in losses or “no decisions” outcomes.

Shortly after launching the company we had an opportunity with a large account that ultimately narrowed their short list to CustomerCentric Selling® and another competitor. The two most influential members of the buying committee were the SVP of WW Sales and the Manager of Sales Training. Looking at the org chart, many sellers would have assumed the SVP was the decision maker.

While we had access to the SVP he, like many senior executives, left a detailed analysis of both vendors to his Manager of Training, who attended one of our public workshops to assess our offering. Our competitor consistently tried to call on the SVP whom they had met with. While at times successful this tact wound up alienating the Manager. As you’d suspect, we ultimately won the business, but later asked exactly how the decision was made.

It’s important to know that both primary contacts had been in their jobs for more than 5 years. The manager had rolled out several successful programs and enjoyed a good working relationship with the SVP. When finalizing the decision, the Training Manager presented his summary of both programs and made the recommendation to choose CCS®. Probably the biggest concern was that we had been in business for less than a year. As it turns out, the SVP had confidence in the Training Manager and effectively “rubber stamped” the decision.

There are many instances where sellers assume the highest person in the org chart will be the decision maker. As with most things related to selling, this can be a dangerous assumption. We would end up reading the situation correctly, but consider how different the decision making process would have been if some things had been different:

Either person was fairly new in their position

Some of the programs rolled out by the Manager had not been well-received

The two Key Players didn’t have a good working relationship

We had never gotten access to the SVP

Studies show that senior executives typically like to get involved early and late in buying cycles. That said, when senior executives are involved in making vendor decisions it’s hard to predict whether they will actively participate or passively accept the recommendation of people reporting to them. In the case cited above, we had commitment in that the manager took 3-1/2 days to attend our program and we had access early access to the SVP.

A good way to gain insights is to revisit how decisions got made after the implementation has been completed. I suspect you’ll discover that fairly often the person signing the agreement was not the decision maker.

When we conduct sales training workshops, our goal is equal parts skills transfer and equal parts behavior modification. One of the behaviors we work to condition out of salespeople through a combination of education and training is the tendency to default to percentage discounts in an attempt to close business. In fact, one new client commented as part of our discovery discussions, “My salespeople think that negotiating means discounting until the prospect says ‘yes’.”

When we peel back the layers, we find that the most common reason for discounting is a lack of understanding of value, both on the part of the prospect and on the part of the salesperson. In other words, not only has the salesperson been unable to get the prospect to articulate the value through deliberate measurement of their current operating environment, in many cases the salesperson is unaware of the value themselves.

Without a clear, mutual understanding of the value being provided, salespeople typically default to price when negotiating. In fact, when squeezed on price, many salespeople default to the question:

“Where do we need to be?”

Those are the six most expensive words in business. When a salesperson asks that question in a negotiation:

They have effectively acknowledged that they also believe a discount will be necessary to close the business.

They have implied they have the power to grant that discount.

The prospect rarely if ever provides a reasonable response.

The prospect sets the bar far lower than what they are willing to pay and then the salesperson has to fight tooth and nail for every point of margin in between.